Thursday, March 19, 2015

Markets retreat after Fed rally

Dow lost 82, decliners over advancers 3-2 & NAZ went up 8.  The MLP index pulled back 4+ to the 421s & the REIT index went up pocket change above 340.  Junk bond funds slid lower & Treasuries rose taking the yield on hte 10 year Treasury near 1.9%.  Oil lost ground again & gold crawled higher in the mid 1100s.

AMJ (Alerian MLP Index tracking fund)

CLJ15.NYM....Crude Oil Apr 15...43.25 Down .....1.41  (3.2%)

GCH15.CMX...Gold Mar 15....1,166.70 Up ...15.30 (1.3%)

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The index of US leading economic indicators increased in Feb, reflecting higher stock prices & a gain in building permits.  The Conference Board’s index, a measure of the outlook for the next 3-6 months, climbed 0.2% for a 2nd month.  The gauge, which matched the median forecast, compares with a 0.5% increase on average in the last 6 months of 2014.  Smaller gains in the LEI so far this year underscore the view of Federal Reserve policy makers that the economy “has moderated somewhat.”   7 of the 10 indicators in the Conference Board’s gauge contributed to the Feb advance, led by the difference between the yield on 10-year Treasury notes & the federal funds rate.  A weather-related increase in jobless claims & a drop in the factory workweek restrained the LEI last month.  The index of coincident indicators, a gauge of current economic activity, also increased 0.2% for a second month.  The gauge tracks payrolls, incomes, sales and production & a gauge of lagging indicators climbed 0.3%. 

Leading Indicators in U.S. Increase 0.2% for Second Month

Jobless claims rose by 1K to 291K in the latest week from a revised 290K in the prior period, according to the Labor Dept.  The forecast called for 293K.  After weeks of weather-related swings, claims settling at the current low level shows employers are holding on to workers, which bodes well for household spending, the biggest part of the economy.  The results are in sync with the assessment of Federal Reserve policy makers, who said after their meeting that job-market conditions have improved.  The Labor Dept revised the previous week’s figure from an initially reported 289K.  The 4-week moving average, a less volatile measure than the weekly numbers, increased to 304K last week, from 302K.

Jobless Claims in U.S. Little Changed in Payroll Survey Week

German Chancellor Merkel vowed to keep the € intact as the strain of keeping Greece afloat opened divisions at the ECB.  Merkel will meet Greek Prime Minister Tsipras at a EU summit to prepare for more financial aid stalled & the ECB Governing Council fending off calls from its own banking supervisors to tighten the screws on the Greek gov.  “If the euro fails, Europe fails,” Merkel told German lawmakers, reprising an expression she adopted during the height of the debt crisis from 2010-2012.  “The eyes of the world are looking at how we deal with problems and crises in individual countries of the euro zone. The euro is more than a currency.”  Merkel, who said in her speech that a deal won’t happen in the coming days, is ready to go a long way to find an eventual compromise, said a German official.  Nonetheless, she plans to tell Tsipras that she expects Greece to play by the rules.  While the German leader strove for a conciliatory tone, Greece’s position within the currency union is getting increasingly uncomfortable.  Bond yields jumped to their highest in almost 2 years after the ECB granted Greek officials only part of their request for more emergency funding.  The ECB’s supervisory arm wanted to go even further, & prohibit Greek lenders from increasing their holdings of short-term government debt.  The central bank’s top decision-making body, the Governing Council, rejected that request which would have jeopardized the prospects for political progress.

Merkel Vows to Keep Euro Intact as She Dives Into Greek Standoff

Stocks are taking time out for a rest after yesterday's big gains.  While all popular averages are near record highs (even NAZ), there is an underlying current of significant issues out there.  The strong $ & weak € are creating problems for multi nationals.  The Greek debt mess is a constant threat.  And global foreign relations, starting with the MidEast, are in sad shape.  Next month brings earnings & the GDP report for Q1 which is being revised lower by about everybody.  I don't know!

Dow Jones Industrials


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